I'm quite new to SilverStripe, but I've had a similar problem and will try my best ;).

1) You need to activate mod_rewrite in Apache's httpd.conf, both the module (but you have done that, otherwise the installer would complain on the first page) and AllowOverride. For your document root set AllowOverride to All. On my Windows pc it looks like this (c:/webserver is the document root) - not sure if this is great for security, but it's only a test machine:

<Directory "C:/Webserver">
Options All
AllowOverride All
Order allow,deny
Allow from all
</Directory>

2) Now you could test if mod_rewrite is generally working, just to make sure. Or skip this step if you are sure everything is fine.
I used the example of Bob and Alice from http://www.workingwith.me.uk/articles/scripting/mod_rewrite for testing (just copy and paste alice.html, bob.html and the .htaccess).

Vodor, concerning the security: I think I have not phrased that well. I didn't want to imply it's insecure - it just didn't know and care too much, as it's no public server.
But as far as I know it should be fine :).